To run a successful business, it is really important to keep track of your business records. This can include sales, expenses, inventory, and other important data. Without a proper system for tracking your business records, you may find yourself struggling to keep track of your finances and operations. Moreover, your ability to secure the growth of business is in part based on how clean, organized and accurate your business finances are.
Recordkeeping does not have to be a pain in the butt. When you have a proper system in place, you’ll find it much less complicated to keep a habit of it. These tips can also be used for accounting and tax season.
With good recordkeeping, you will find it a lot easier to make better business decisions for your business.
In this article, we have compiled the top 10 practices that can help you keep better business records. If you’re struggling to keep track of your business records or you just want to know how to keep better business records, then this article is for you! So let’s get started!
Create Separate Bank Accounts For Your Business
The biggest mistake some small business owners make is using their personal bank accounts for business transactions. This is a no-no! As a business owner, you need to create separate bank accounts for your business. This will make it a lot easier to track your business-related expenses and income.
When you have a separate bank account, you can easily see how much money your business is making and where it’s being spent. It’s easy to get confused when your personal and business finances are all mixed. Trust me, I can attest to this, and spending long hours cleaning this up, is no joke!
Generally speaking, you should have 2 main accounts for your business, a business chequing or operating account, and a credit card account. If you wish to go above and beyond, you can also have an account that collects and saves the taxes you may need to remit to government officials. Having these accounts in place will keep you much aware of your business activities and make effective business decisions.
Calculate Your Expenses And Revenue Regularly
Whether it is weekly or monthly, it is important to calculate your expenses and revenue regularly. This is where a bookkeeper service may be of great help. A bookkeeper will help you stay on top of your finances and make sure your business is making a profit.
If you do not calculate your expenses and revenue regularly, it’ll be tough to track your progress and figure out where your business needs improvement.
Calculating expenses and revenue regularly will also help you create a budget and forecast for the business. This will come in handy if you are seeking a loan or investment from financial institutions.
Keep A Record Of All Transactions
If you want to keep track of your finances, it is important to keep all your documents and paperwork to back up your transactions. This will include having receipts, invoices, contracts, and any other important paperwork. Without this proper documentation in place, it’ll be difficult for you to back up your expenses and transactions. And unfortunately, bank statement lines do not count as backup, sorry.
Accurate recordkeeping involves having a system in place to help you. Some of the best record-keeping tools include:
- Dext
- Hubdoc
- Quickbooks Receipts
- Excel
There is other software to choose from to help you with the recordkeeping but they generally all do the same thing. They will store your records in a secure cloud portal to be retrieved at a later time. Most of them even have the capacity to sync with your accounting software so that you can match each record with a transaction.
Back-Up And Secure Your Records
In line with point number 3, also make sure that your files are secure and backed up regularly. If you want to get rid of a record, make sure it’s not the only copy.
It is generally enough to store your documents in the cloud using the software mentioned in point number 3. However, if the cloud is still foreign to you, good all fashioned, external hard drives or flash drives are also excellent backup tools.
Use Accounting Software
One of the most important things you can do for your business is to set up an effective bookkeeping system. This will help you track your expenses, income, and other important data. When everything is organized and easy to find, it’ll be a lot simpler for you to keep on top of your business records.
There are a lot of great accounting software programs on the market today. These programs can help you keep track of your expenses, income, and other important data. They can also be used for tax purposes. They always give you 100% accurate and up-to-date information. They are also super fast and save you a lot of time so you can focus more on your business. If you are not using accounting software, you are missing out on a lot of things. Here are some of the best accounting software you can find in the market:
- QuickBooks
- Xero
- Freshbooks
- Wave
- Sage
Hire An Accountant Or Bookkeeper
If you are feeling overwhelmed by your bookkeeping and accounting, then it might be a good idea to hire a small business chartered accountant in London. A common mistake people make is doing their own bookkeeping with no experience or hiring a bookkeeper or accountant after a year into the business. This has proven to be a costly mistake for many business owners.
An accountant or bookkeeper should be part of your business plan. If implemented at the start of your business, they will help you keep track of your business finances and offer helpful advice that may help you in securing a loan in the long run. They have all the experience and knowledge when it comes to understanding and knowing what is right for your business. They can help you find gaps in your bookkeeping and help you figure out how to close them. Overall, they are the subtle nudge you need to keep your business organized while you think about getting a loan for the business.
Have A Budget For Your Business
Creating a budget for the business is a discipline for your business. One that encourages you to spend money wisely and keep the business operational.
A good budget is crucial is one that will allow you to track current operations and prepare for future ones. Looking at the future operations of the business is called forecasting, and it may be part of your portfolio when securing a loan. A well-structured budget and forecast can be the determining factor in securing a loan as it can show your ability to manage money and the business well.
Collect Money From Invoices And Pay Debts
Invoices need to be paid in a timely manner and debts need to be paid on time. Every loan process requires an analysis of how much money you have coming in from invoices and how much debt you have to pay.
You should have a system that manages debts/expenses (accounts payable) and income (accounts receivable).
To manage debts, it is wise to have a system in place to track those that are current, overdue or upcoming. To manage incomes, it is important to remind clients of outstanding debts and take immediate action when invoices are not paid. This practice will help you keep a revolving cycle of collecting revenue to pay off debts in a timely manner. Such a practice is crucial to getting approved for your next business loan.
Conclusion
So there you have it! Ultimately, keeping your records organized will help you make better business decisions and keep your business running smoothly and efficiently. By following these top 8 reliable tips, you will be sure to impress financial institutions and secure a loan in a breeze!
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Author Bio
Samuel is the owner of Paperless Books, a bookkeeping service in Canada with a focus on automating business tasks for small business owners. If he is not writing, he is running laps with his Doberman.
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